Permanent Energy Crisis

NO SUBJECT gets talked to death more than "diminishing our dependence on Middle Eastern oil." Yet as conflict with Iraq looms, what do we face but another Energy Crisis?

Between January and late February, the price of a barrel of oil rose from $32 to $40, highest since the first Gulf War. With war near, speculators are bidding up futures. An extremely cold winter in the United States and Europe hasn't helped. (Where is global warming when we need it?) World supplies are reeling from the meltdown of Venezuela, which provides 4 percent of global oil and 14 percent of our imports. A year ago Venezuela was producing 2.4 million barrels per day. By December it had fallen to 150,000. We've made up for the loss by increasing imports from--you guessed it--the Middle East.

Higher petroleum prices have spilled over into natural gas markets. Future contracts crept from $2 to $6 per million BTUs in 2002, then spiked at $10 in late February. Storage levels have declined 40 percent. In Texas, shortages have curtailed several electrical plants.

Over the last decade, natural gas has become everybody's favorite fuel--the supposed answer to all our energy and environmental problems. California, frantically building power stations after the 2000 debacle, now gets 45 percent of its electricity from natural gas. Nationwide, the figure is only 15 percent, but 91 percent of new plants are burning methane (the principal component of natural gas). The 14 percent of natural gas used to generate electricity now approaches the 22 percent used for home heating.

All this has brought hosannas from environmentalists. The Sierra Club has issued a "national energy plan" urging conversion to methane. It even supports a natural gas pipeline from Alaska to California. The Bush administration is also touting the project, but construction is ten years away.